lassoharp said:
This whole class warfare is a red herring. While not perfect 1:1 the highest incomes are earned by people creating the most wealth, they also create jobs as consequence of creating this wealth.
As a smoke and mirrors tactic used by the media often these days yes, agreed. But what hodad alluded to is just a reality and I don't understand why every time someone mentions the lopsided ratio of top level CEO pay to avg worker pay it gets labeled as merely a hollow tactic.
Generally because it is. Class warfare is used to create an "Us vs Them" mentality, to justify taking wealth to redistribute to those less wealthy. As I have mentioned before this is zero sum game thinking and wealth is not a fixed pie to divide up, but a dynamic quantity that we need to grow. I hate this old cliche but a rising tide lifting all boats is more true than not. Certainly a falling tide like we are still suffering (0.1% GDP growth is not helping anybody).
As has been pointed out before, you could take 100% of the wealth from the top few percent and that would not cover the entitlement largess already promised. Just like Willie Sutton robbed banks because that was where the money is, the government must tax the vast middle class for the same reason, that is where the wealth is. Who do you think is paying for the ACA train wreck, not the wealthy?
Unless those numbers that keep showing up in the media are just plain lies, they point to the source of why it is and essentially always has been very difficult for the avg working person to earn enough to raise a family, own a house, afford insurance etc without getting into a debt so big that it amounts to being bankrupt.
Please amplify what exactly this explains? (As I've noted the current fed and administration has amplified the wealth differences, despite good(?) intentions).
There has always been disproportionate wealth. Even back in the cave man days somebody got the good spot in the cave and others slept outside. Great thinkers, smarter than me, have pondered this for as long as we were comfortable enough to think about such things Over history there have been numerous failed experiments that tried alternate methods to parcel out resources for the best effect and ALL have failed miserably. Look at Venezuela today, an oil rich nation that squanders that wealth believing that the central government can make economic decisions better than individuals.
You can not get blood from a stone, and forcing a Macdonalds to pay $10+ to menial workers, without the ability to raise the prices of the food enough to cover the extra cost, simply will not work. Instead we will see more automation and elimination of more of those jobs.
And the other option here is that the money to cover labor will come from the top tier taking home less personal pay . . . . and on that I would echo "You can not get blood from a stone" :'( It's the business model I'm attacking here. It seems to be the same as it has always been - lions share for the top and barely enough for the bottom. I do not agree that that is the only way to model a corporation but it's ingrained and it's worked for many a company so very hard to change.
You are free to operate your corporation any way you choose, but again history has studied numerous variants on corporate structure. (Harvard business school has done case studies for decades). To get the best effort from employees they are motivated by a sense of cause and effect. Their compensation is related to their effort/results. Note: this can cause problems in some areas, like the way some wall street deal makers were rewarded in real time for making big deals, but not punished with claw backs for the deals that crashed years later. Connecting these dots is required to damp excessive risk taking, when there is not negative feedback for bad deals.
Top executives are highly paid because it is not a linear job, but their leadership is a force multiplied where they can inspire an entire workforce, or drive the bus into a ditch. The most successful top earned demonstrate over time their ability to create wealth, for stock holder who own the company. Of course there are always numerous examples of overpaid business leaders, just like there are overpaid athletes and actors. If you want XYZ to run your company you must pay the market price of live with lesser results. The artificial constraints that there should be some finite ratio between highest paid and lowest paid worker is arbitrary and not based on maximizing wealth creation.
The stagnation is not caused by the concentration of wealth, but by anti-business policy in taxation and regulation, and even negative messaging. What business leader feels confident about the future and his costs.
Again, I'm seeing this as a reaction by corporations (who
do have a choice) to keep things just as they are which is arguably a stagnation in itself. Govt meddling is resented but so was employee activism. Which is better or worse? The bloody confrontations between striking laborers and corporate goons in the old days? or Stifling policies of today? Very rarely it seems does either accomplish it's goals which is a better pay scale per job performed.
I have tried to say this before.. Government can not mandate an economic result by force. Again Cuba or Venezuela are examples for that. To increase workers compensation we must enable them to create more wealth. Gone are the days when mindless factory work could enjoy a fat paycheck. The world is getting flatter and we must now compete internationally. Despite the poor business environment skilled jobs still go unfilled.
If the government really wants to help, provide more targeted training and instruction, not more money to sit around and do nothing. Paying people to not works, does not incentivize people to work.
Improved economy? I don't know but I do think people will spend it if they have it. What other options are left? IMO it's change the model or move back in the direction of trickle down and start removing the govt red tape. If those printed ratios are correct we should be seeing plenty of trickle down money right now but apparently it;s not happening as it should.
The recent interest rate manipulations (and quantitative easing ) have generated great wealth "valuation" increases on paper (real estate, stocks, and assets) but not creation of actual new wealth. Of course we are digging out a deep hole created by too easy credit bubble that collapsed in 07-08.
My grandparents worked most of their lives in a cotton mill and retired in the 70s with little more than the tiny mill village house to their name. They never owned a car and grew most of their own food. They were by and large vegetarians of circumstance - only because they could only afford to buy meat once a week. In contrast several people I graduated with in the mid 80s went to work at that same mill doing the same jobs and live comparably good lives by any standard. They were able to raise families and afford most any of the material things they wanted and put away savings without undue struggle and well above what my grandparents and others in that generation wound up with. So what had changed? It's a good question since the workers in my generation were there during the last era of the mill which closed its doors for good in the 90s. My grandparents worked during the heyday when trickle down should have been highest in theory. The only for sure thing is that the later generation workers were paid more relative to the cost of living of their time. And, I doubt the mill deviated from the traditional model of all to the top and as little as possible to the bottom.
Sorry I have no idea about that particular dynamic.
The biggest problem I have with the theory of Free Market competition is that it fails to account for the inevitable - which is that the forces of monopolization overtake the ideal - the nice model of having all these different corporations competing, unencumbered by govt meddling, for the benefit of all has the shadow of the shark forever looming over it's head.
Just to be clear, free markets are arguably the optimal way to allocate resources for best result. The market manages scarce resources by raising the price and encouraging investment to find more. $100/brrl oil has caused huge increased in pursuit of more, that $20 oil would not.
A monopoly will get away with what it can and it probably will not be good for the avg worker. But, I don't think excessive regulation is the answer either.
Capitalism is IMO the best model, but far from perfect. We need some regulation and government oversight to prevent the excesses of capitalism that will try to suppress competition. Despite the anti-business climate from the current administration, their trust-busting efforts seem mixed. They have allowed consolidation in the airline industry that has reduced competition. In a Casablanca "I'm shocked" moment, we are discovering that the large silicon valley employers cut back room deals to not poach each other's talent. This reduced pay and opportunity for the silicon valley workers actually creating the wealth. They don't need a union but those companies need to get spanked for illegal behavior.
Regulators are not smart enough to manage routine business decisions but they should at least be able to find the larger rats in the wood pile. I am still unhappy about the apparent lack of regulatory movement related to high speed trading. While front running large trades may seem victimless, it saps wealth from large mutual funds often handling retiree money. Smart money has found ways to mitigate the high frequency advantage, but it still goes on.
Regulators need to be smart (smarter than they are) and operate with a light hand.. not force armed confrontations with citizens over civil matters.
At some point corporations will have to adopt a more global and humane minded model of running a business. One that does not view even the most menial labor as disposable. If they are good enough to be hired for the job then the job should be good enough to warrant paying a decent wage.
How good must they be to work as a door greeter at Walmart? Pay should reflect value creation from that work effort.
That would include cashiers in supermarkets and conv stores. The stores can't operate without them and most of the workers can't pay their bills on what they're being paid to do them, not to mention what they have to put up with. I think what is often failed to be realized is that something like a cashier's job is not exclusively a stepping stone filler job on the way to greater things after the college degree has been earned. It will be a permanent bread winner for many for a variety of very good reasons.
Which is why we see more and more self check-out stations.
We cannot mandate an outcome, we must instead look at ways to make the entire pie larger.
In the mass idealism I hope we can see the day soon where the monikers reflect a different perspective than what we seem to be saddled with now. I'm big on the literal meanings of words and phrases and how they often perfectly reflect the realities behind them. "Job Creators" infers a minimal offering at best and is a phrase that is remarkable for it's omissions,
The more important nomination is "wealth creators", job creation is a euphonious side effect. Make-work Job creation for the sake of just generating more jobs, was practiced during the depression by the government, and a lesser evil than paying people to do nothing (like today) but not a solution.
rate of pay for one. And the term actually doesn't imply any pay at all . . .. the dictionary definition clearly states either. It's only an exercise in semantics and philosophy in the classroom - in the real world it's too many people not being paid enough for their work.
Again, if people are not adequately compensated for the wealth they create, create that wealth elsewhere, or by themselves. People do not earn payment because they need it, payment should reflect wealth creation or it is unsustainable..
And should the Image Maintenance Think Tank people decide to shift it to a more comforting "Living Wage Job Creators" . . . . .. nope. Still comes up short on the omission of the definition of "Living". Too wide a range there. Maybe having to promote no moniker is best since it would imply that people are satisfied enough with the equality in their jobs that they don't need to be coaxed to the polls in hopes of changing things.
This belief that government can make everything better, is used by politicians to win office. I am inclined to repeat, look around. How much better are we than a year ago or two or 4? The good news is the new jobs was decent in this months report but labor participation is still weak.
If we keep doing what we are doing, we will keep getting what we are getting.
JR
